Child Maintenance through Limited company

[SoSBeingAMumIsHard]

Has any receiving parents successfully
won their disputed maintenance payment when the paying parent is under declaring their true income by paying themselves less than minimum wage through a limited company?

Are they taking dividends? If so then the dividends are also taken into account.

I don't know but currently he he is successfully declared himself as earning £8700 PA.
Us there any way to find out?

Can you see the companys annual returns on Companies House? Might give you a clue

Presumably his lifestyle costs considerably more than that. You can request reassessment on those grounds.

He needs to provide the details from his self-assessment. I am a company director and am paid a minimum salary but I have to fill in a self-assessment each year to declare my dividends. (I have to provide these details for my son's student finance so I would assume it is the same for him with child maintenance as it is classed as your taxable income).

For a small company that won't show on companies house.

Also make sure you you have any P11D benefits as they are classed as taxable income too. (company car etc)

So I can see he hasn't done any tax returns for the last two years. Prior to that it was only a micro account.

Is a P11D something CSA should request?

I'm completely out of my depth with this as I don't understand the Self employed route so really appreciate your advice

He’s not self employed if he owns a limited company.

He is a legal entity and the business is a separate legal entity. It employs him on a low salary that protects his NI record but doesn’t attract income tax payments. As the owner of the business, he can withdraw profits as dividends (which are treated slightly differently for tax purposes).

You need to ask CSA to access his HMRC records of total income as his payslips won’t show the full income. And anything else that suggests he has more money coming in than £8700 a year.

If he’s limited company he can’t “hide” his income.

p11d is expenses so I doubt that’s worth chasing.

ask HMRC/CSA to review his dividends and account for them is his child support. The figures will all be on his annual tax return.

p11d isn’t expenses, it’s benefits in kind. So anything the comity gives to him instead of salary, a company car is the most common one.

I am currently going through this (and at the point of applying to tribunal).

You can raise ‘variations’ with CMS on three different grounds - assets (eg. savings, land greater than £31k), non earned income (eg. property income and dividends) and also diversion of income (this could be diverting to another source (do you know if anyone else is a director or shareholder/who is also a relative and could receive a wage or dividend from the company? Also, he may be retaining profits in the company and not dividending them out (waiting until children reach 18 to avoid child maintenance)?)

The non earned income (dividends) and diversion of income grounds are most relevant to a limited company. If you know he has other assets as well then raise the asset variation. You need to send evidence to CMS (companies house info showing him as director and shareholder etc).

I have spoken at length to CMS and their general view is variations related to limited companies are sometimes too complicated to assess where dividends are not properly being paid out or paid out at all (and usually are rejected by CMS and then you can request a mandatory reconsideration from CMS which, once received, allows you to take it to the more experienced tribunal (which has powers to demand information etc)).

The diversion of income ground allows them to order that income should be deemed to be included in the CMS calculation (eg. A dividend should have been paid out to him, a higher salary should have been paid out).

This is what I was going to post. Sums it up nicely.

They haven't been done since 2021

Thank you for this.

The variation was rejected.

So currently I am at a mandatory reconsideration stage.

I believe following this I can take it to a tribunal? Is that correct?

My ex did this. Paid himself 10k
Paid his fiance 80k for being his ' staff' she also had a ft Job so didn't actually work for him.

They had nice holidays , nice car and all that.
Cms said nothing they could do . As his lifestyle could be ' off the back of his wife's imcome'

He saved loads in a business savings. And as soon as dc was of age he didn't have to pay he withdrew it all as dividends. I know this as he told and showed dc when they were 18

They said that he could pay his fiance 80k as that was the average for a person with that job title. So wasn't suspicious.

He said he was saving the income in the business to buy bigger premises

Yes - once you have the decision notices then apply to tribunal within the strict time frame (30 days?).

Is that what the tribunal said or CMS said? I have been told (by CMS) that any diversion of income claims are best referred up to tribunal since they don’t really understand the complexities of it. Sorry you didn’t get anywhere with it.

You now need to appeal to the Independent Tribunal Service.

As you have no access to the full company accounts or your ex's bank statements throw everything in.

Contrary to what one poster above mentioned you can no longer allege lifestyle inconsistent with declared income, though that can still form part of the evidence.

You will be appealing alleging diversion of income, or failure to declare income. This can include paying someone else instead of himself, or keeping income in the company. The problem you might have with all of this is proving it, but They will certainly look at his outgoings as against his declared income, and can get his personal and company bank statements.

Rubbish. The income tax on that would have outweighed any business savings.

Hi @Bumblebee47 would you mind me asking how you have gotten on with this since your last post? I anticipate going down the exact same route and would really appreciate any feedback on your own experience. Thanks in advance! x

Have you reported him to HMRC?

Hi - interestingly I was in touch with the tribunal service earlier today.

Not much has happened - all three appeals were submitted in December but the DWP (CMS) have not yet provided any disclosure by the deadline this week (they are meant to provide a bundle) so just waiting now on further directions.

I did this and won. Lifestyle inconsistent with earnings. Everyone grumbles about competence of CMS but they were great for me. Chairperson asked for an accountant on his panel. She was bloody brilliant. She asked him in advance to provide proof of rent, provide bank statements. Then went through item by item with him. Eg. How much is your rent, your council tax, your electricity, your gas, your water rates, your food bill, fuel for car, car payments, dentist, barbar, gifts bought for DC, cinema visits with DC, holidays he took etc. it all came to £18.5 k more than he declared he earned. Plus he had dogs and had not included dogs food or injections. She told the chairman he was clearly not putting all his earnings down. It turned out he had just used company card to draw cash out whenever he wanted, because he's not smart. I ended up getting a huge back payment for almost 2 years, (21 months). I also owned half the shares in company and he had been refusing to show me accounts so I took him to High court Chancery Division court for that too. We were ordered to get business valued and he could buy me out or business had to be sold. He had to get a big loan to buy me out.